Cost Per Acquisition
Calculate your cost per acquisition to understand how much you're paying for each conversion. CPA helps you evaluate campaign efficiency and ensure acquisition costs stay below customer lifetime value.
CPA Formula: Total Ad Spend ÷ Total Conversions = CPA (e.g., ₹5,000 ÷ 25 = ₹200 CPA)
Target CPA: Your CPA should be lower than your customer lifetime value (LTV) to be profitable
Industry Benchmarks: E-commerce: ₹300-800, SaaS: ₹1,500-5,000, Local Services: ₹500-2,000
Lower CPA Strategy: Improve Quality Score, optimize landing pages, use negative keywords
Track by Segment: Monitor CPA by campaign, device, location, and time of day for deeper insights
Cost Per Acquisition (CPA) measures the total cost to acquire one paying customer through your advertising campaigns. It includes all ad spend divided by the number of conversions. For example, if you spend ₹10,000 and get 20 sales, your CPA is ₹500. This metric is critical for determining campaign profitability and scalability.
CPA = Total Ad Spend / Number of Conversions
Example: You spent ₹25,000 on Google Ads this month and received 50 orders. Your CPA is ₹25,000 ÷ 50 = ₹500 per customer.
The golden rule: Your CPA must be lower than your Customer Lifetime Value (LTV). If your average customer is worth ₹2,000 over their lifetime and your CPA is ₹500, you have a healthy 4:1 LTV:CPA ratio, which is considered excellent for most businesses.
Practice lowering your CPA in a risk-free simulation environment before spending real budgets.
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